Airbus pays $1m to settle contract overbilling claims

13 October 2021

The defence arm of Airbus has agreed to pay the US government more than a $1m to resolve a civil lawsuit about overbilling in federal contracts.

Airbus US Space & Defense Inc, formerly known as Airbus Defense and Space Inc (ADSI), will pay $1,043,475 in response to allegations it violated the False Claims Act by billing impermissible fees in contracts with a number of federal agencies. 

According to the Department of Justice (DoJ), between January 2016 and January 2017 ADSI submitted proposals for contracts that included an unapproved cost rate to which ADSI was not entitled. ADSI referred to this as the “Orlando Factor”.

The government also alleged that on certain contracts, from 2013 to 2020, ADSI charged federal government agencies an extra fee from its affiliates on top of ADSI’s own fee for parts ADSI acquired from these affiliates, but did not accurately disclose this fee to the government.

ADSI also charged a third-party contractor an excessive monthly fee to store a radar system purchased to support a contract with the US Navy, the DoJ alleged.

The contractor passed along the full storage fees charged by ADSI to the US Navy. However, ADSI did not disclose that they paid only a portion of those fees, it was alleged.

The claims were brought under whistleblower provisions of the False Claims Act by a former ADSI employee. The Act permits private parties to sue for false claims on behalf of the government and to share in any recovery. The former ADSI employee in this case will receive $157,220 of the settlement.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Acting assistant attorney general Brian Boynton of the DoJ’s Civil Division said: “Government contractors have a responsibility to bill the government both accurately and transparently. Companies that knowingly inflate their costs or otherwise improperly bill the government will be held accountable.”

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